More than 15 years ago The Economist published a briefing paper sponsored by Cisco, called concluding that tens of millions of dollars had been spent evaluating corporate governance but a *definition of corporate trust continued to elude us. The 2008 financial crisis essentially destroyed investor confidence in the stock market and the ethical decision making practices of business leaders and their public companies. And so it should come as no surprise that trust in the financial markets has stagnated and even deteriorated since that time. After all, what actions, if any, have organizations taken to build investor confidence and trust? Plenty of money is spent on PR “talk” followed by little constructive action.What if instead of using the elusive word “trust” as the barometer, companies could instead be evaluated based on their trustworthiness? In other words, the ethical business principles and leadership practices that support trust building within the organization and can then be applied to all stakeholders. This was the question we began to address over fifteen years ago. With the assistance of academic, financial, corporate and consulting professionals, Trust Across America began to construct what became the FACTS Framework.*Trust Across America describes trust at the individual/interpersonal level as the “outcome of principled behavior” and organizational trustworthiness as the “collective outcome of principled behavior.”Our published in November 2021 continues to be, by order of magnitude, the most comprehensive and data driven analysis available regarding the trustworthiness of public companies. It speaks to both the public and the financial industry’s understanding of trust, supports trust based investment decision making and enables targeted and simplified trust portfolio construction. We analyze companies quarterly and rank order by company, sector and market capitalization.As our chart and study link above highlight, trustworthy public companies are rewarded over the long-term. They not only avoid expensive crises but also have the benefit of broader internal and external stakeholder support. Low trust keeps investors out of the stock market and on the sidelinesIt has not been valuation, liquidity, or profits that keeps many investors on the sidelines. It is a lack of trust in both the financial industry and in the ethical actions and decision making practices of public company leadership. Even after a time of dramatic returns over the past several years, vast amounts of money remain parked in low yielding money market accounts and other underperforming investments. By delivering a time tested and “beyond reproach” strategy to investors combining the key drivers of corporate trustworthiness, Trust Based Investing can serve as a viable solution that both the industry and the public has been seeking. In conclusionTrust Based Investing provides the following:
Should Investors Care About Trust?
The returns of the Trust 200 Index over 13+ years according to IndexOneMore than 15 years ago The Economist published a briefing paper sponsored by Cisco, called concluding that tens of millions of dollars had been spent evaluating corporate governance but a *definition of corporate trust continued to elude us. The 2008 financial crisis essentially destroyed investor confidence in the stock market and the ethical decision making practices of business leaders and their public companies. And so it should come as no surprise that trust in the financial markets has stagnated and even deteriorated since that time. After all, what actions, if any, have organizations taken to build investor confidence and trust? Plenty of money is spent on PR “talk” followed by little constructive action.What if instead of using the elusive word “trust” as the barometer, companies could instead be evaluated based on their trustworthiness? In other words, the ethical business principles and leadership practices that support trust building within the organization and can then be applied to all stakeholders. This was the question we began to address over fifteen years ago. With the assistance of academic, financial, corporate and consulting professionals, Trust Across America began to construct what became the FACTS Framework.*Trust Across America describes trust at the individual/interpersonal level as the “outcome of principled behavior” and organizational trustworthiness as the “collective outcome of principled behavior.”Our published in November 2021 continues to be, by order of magnitude, the most comprehensive and data driven analysis available regarding the trustworthiness of public companies. It speaks to both the public and the financial industry’s understanding of trust, supports trust based investment decision making and enables targeted and simplified trust portfolio construction. We analyze companies quarterly and rank order by company, sector and market capitalization.As our chart and study link above highlight, trustworthy public companies are rewarded over the long-term. They not only avoid expensive crises but also have the benefit of broader internal and external stakeholder support. Low trust keeps investors out of the stock market and on the sidelinesIt has not been valuation, liquidity, or profits that keeps many investors on the sidelines. It is a lack of trust in both the financial industry and in the ethical actions and decision making practices of public company leadership. Even after a time of dramatic returns over the past several years, vast amounts of money remain parked in low yielding money market accounts and other underperforming investments. By delivering a time tested and “beyond reproach” strategy to investors combining the key drivers of corporate trustworthiness, Trust Based Investing can serve as a viable solution that both the industry and the public has been seeking. In conclusionTrust Based Investing provides the following:
Companies have proven through a rigorous analysis that they are trustworthy and represent lower investment risk.
Investors can be assured that ethical business and investment decisions are being made.
Trustworthy companies have stable and strong investment returns.
A virtuous cycle is created. As investment money flows into the hands of these companies, other companies will want to follow suit and become more trustworthy.
You can follow the progress of the Trust 200 Index at this link or contact me directly at barbara@trustacrossamerica.com
is an author, speaker, product developer and global subject matter expert on trust and trustworthiness. Founder of Trust Across America-Trust Around the World she is author of the award-winning , Trust Inc., 52 Weeks of Activities and Inspirations for Building Workplace Trust and Trust Inc., a Guide for Boards & C-Suites. She majored in International Affairs (Lafayette College), and has an MBA (Baruch- City University of NY). Her expertise on trust has been cited in HarMore By This Author:
More than 15 years ago The Economist published a briefing paper sponsored by Cisco, called concluding that tens of millions of dollars had been spent evaluating corporate governance but a *definition of corporate trust continued to elude us. The 2008 financial crisis essentially destroyed investor confidence in the stock market and the ethical decision making practices of business leaders and their public companies. And so it should come as no surprise that trust in the financial markets has stagnated and even deteriorated since that time. After all, what actions, if any, have organizations taken to build investor confidence and trust? Plenty of money is spent on PR “talk” followed by little constructive action.What if instead of using the elusive word “trust” as the barometer, companies could instead be evaluated based on their trustworthiness? In other words, the ethical business principles and leadership practices that support trust building within the organization and can then be applied to all stakeholders. This was the question we began to address over fifteen years ago. With the assistance of academic, financial, corporate and consulting professionals, Trust Across America began to construct what became the FACTS Framework.*Trust Across America describes trust at the individual/interpersonal level as the “outcome of principled behavior” and organizational trustworthiness as the “collective outcome of principled behavior.”Our published in November 2021 continues to be, by order of magnitude, the most comprehensive and data driven analysis available regarding the trustworthiness of public companies. It speaks to both the public and the financial industry’s understanding of trust, supports trust based investment decision making and enables targeted and simplified trust portfolio construction. We analyze companies quarterly and rank order by company, sector and market capitalization.As our chart and study link above highlight, trustworthy public companies are rewarded over the long-term. They not only avoid expensive crises but also have the benefit of broader internal and external stakeholder support. Low trust keeps investors out of the stock market and on the sidelinesIt has not been valuation, liquidity, or profits that keeps many investors on the sidelines. It is a lack of trust in both the financial industry and in the ethical actions and decision making practices of public company leadership. Even after a time of dramatic returns over the past several years, vast amounts of money remain parked in low yielding money market accounts and other underperforming investments. By delivering a time tested and “beyond reproach” strategy to investors combining the key drivers of corporate trustworthiness, Trust Based Investing can serve as a viable solution that both the industry and the public has been seeking. In conclusionTrust Based Investing provides the following:
